A new Georgia Court of Appeals case makes it clear that you can’t specify punitives in a release with the liability insurer in order to get more with a UM settlement in your car accident claim. See, Carter v. Progressive.
Here’s what’s going on and is a great example of how using a lawyer in your case can help you structure personal injury settlements to maximize your recovery, except we can no longer use this strategy after today. In Georgia, punitive damages cannot be recovered against a UM carrier. UM, or under-insured or un-insured motorist coverage, is car insurance the injury victim may have to protect against drivers with no or not enough insurance. You can’t get your UM money until you get all the at-fault driver’s liability coverage. In other words, you have to exhaust the at-fault driver’s liability coverage before moving on to your UM coverage for more money. Additionally, Georgia law holds that you can’t get punitive damages from your UM. They can only be had from the at-fault driver. The reason being is that punitive damages are meant to punish the at-fault person and your UM coverage does not belong to the at-fault driver. It belongs to you.
Punitive damages can be a substantial category of damages that you are entitled to as part of your car accident or personal injury claim. You can usually get them in DUI accident cases and sometimes hit-and-run cases. But because you can’t get them from your UM coverage, once you settle with the at-fault driver’s insurer, you lose the ability to get them and a serious and sometimes substantial amount of money is yanked from your claim.
Georgia injury attorneys used to get around this by specifying in the release with the at-fault driver that almost all the settlement was for punitive damages. This would then shift the majority of all your other damages to your UM coverage, which gave you a bigger settlement. An example is in order.
Suppose in your car accident claim you had $10,000 in medical expenses and the other driver was DUI. And let’s say for the sake of this example your case’s total value was $35,000, not including punitive damages. The other driver has $25,000 in liability coverage, which is the Georgia minimum. If you settled against the at fault driver for the full $25,000, you UM insurer would then only give you an extra $10,000 to settle the case (for a total of $35,000). Now assume instead that your injury lawyer specifies in the release with the at-fault driver that y$20,000 of your settlement was for punitive damages and $5,000 was for your medical expenses and pain and suffering. That would force your UM carrier to pay and additional $30,000 to settle your claim. This latter situation would result in you getting a total payment of $55,000. You would be receiving an additional $20,000!
But that doesn’t work anymore. The Georgia Court of Appeals said allocating punitive damages to force exhaustion of liability coverage does not fit with the public policy of UM coverage because it indirectly shifts punitive damages to the UM. So now that trick is off the table. Nevertheless, this is a great example of what a good injury lawyer can do for your claim in terms of using the law to maximize your settlement.